Iranian authorities say the country is prepared to withstand the latest US economic sanctions, despite growing pressure on its economy and shortages of essential goods.
Iran’s Economy Minister Ali Madanizadeh said the government has developed a two-year plan to keep the economy functioning. He argued that Iran has years of experience in dealing with sanctions and could rely on domestic resources and alternative international partners.
The government has been stockpiling essential goods, foreign currencies and gold. However, Central Bank Governor Abdolnasser Hemmati acknowledged serious economic challenges, including high inflation, falling purchasing power and the near-total halt of oil exports.
Iran’s currency recently fell to a record low of about 2.05 million rials per US dollar on the open market.
Push for domestic production
Iran is also increasing efforts to produce more goods domestically. Agriculture Minister Gholam-Reza Nouri said the country aims to raise food self-sufficiency to 90 percent in the short term and eventually produce all essential food locally.
Iran currently relies on imports for important products such as wheat, maize, rice and vegetable oil. Food prices have risen sharply, with the country’s Statistical Center reporting that food prices in July were more than 128 percent higher than a year earlier.
The government also claims that around 97 percent of medicines are produced domestically, although shortages have affected hundreds of medicines and pharmaceutical prices have increased.
Energy shortages worsen
The war has added to Iran’s existing energy and infrastructure problems. Power blackouts continue in Tehran and other cities, while shortages of natural gas are expected to become more serious during the colder months.
Several petrol stations in Tehran, Mashhad, Karaj and other cities also experienced fuel shortages, resulting in long queues.
Iranian officials say new refineries planned for completion by March could increase fuel production by about 12 million litres per day.
Economists, however, warn that Iran faces difficult choices. Increasing fuel prices could help reduce pressure on government finances, but it could also worsen inflation and increase transport costs.
Despite its efforts to withstand US sanctions, Iran faces growing economic vulnerabilities as the war, shortages, inflation and declining purchasing power continue to put pressure on the population.
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